What is TELx

TELx is fully decentralized, permissionless, and self-custodial, meaning users always maintain control of their assets.

What is Liquidity Provisioning

Liquidity provisioning is the process of committing capital or assets to a market to ensure that buyers and sellers can execute trades quickly, efficiently, and with minimal price impact. It involves entities or individuals acting as counterparties to absorb short-term imbalances between supply and demand, thereby maintaining market stability and reducing bid-ask spreads.

In Decentralized Finance (DeFi), liquidity providers (LPs) deposit pairs of tokens into smart contract-based liquidity pools on decentralized exchanges (DEXs). These pools use Automated Market Maker (AMM) algorithms to facilitate swaps without traditional order books. In return for providing this capital, LPs earn a share of the trading fees and, in some cases, additional protocol rewards.

Why LPs Deposit Multiple Tokens

Liquidity Providers (LPs) deposit multiple tokens to create liquidity pools on decentralized exchanges (DEXs), enabling automated market makers (AMMs) to facilitate decentralized trading without traditional order books or counterparties. By providing pairs of assets (such as ETH/TEL), LPs allow traders to swap tokens instantly at prices determined by the pool’s reserve ratios, while LPs earn a share of the trading fees generated by these swaps.

Why LPs Earn Fees

Liquidity Providers (LPs) earn fees because they supply the token reserves that enable traders to swap assets, with those swap fees compensating LPs for the capital deployed and the risk of impermanent loss. These fees are accrued proportionally based on the amount of liquidity provided and remain active only while the market price stays within the LP’s chosen price range.

What is Impermanent Loss (IL)

Impermanent loss is a temporary reduction in value experienced by liquidity providers (LPs) in decentralized finance (DeFi) pools when the price of deposited assets changes relative to each other compared to when they were deposited. It represents the opportunity cost of providing liquidity instead of simply holding the assets in a wallet, as automated market makers (AMMs) constantly rebalance token ratios to maintain liquidity.

The loss is termed "impermanent" because it is only realized if the LP withdraws their funds while prices remain divergent; if token prices revert to their original ratio, the loss disappears entirely. The magnitude of impermanent loss increases with higher market volatility and greater price divergence, meaning LPs may end up with less total value than they would have had by just holding the tokens, unless trading fees earned offset this deficit.

What is Concentrated Liquidity

Concentrated liquidity is a decentralized finance (DeFi) mechanism that allows liquidity providers (LPs) to allocate their capital within custom price ranges rather than spreading it uniformly across the entire price curve from zero to infinity. First introduced by Uniswap v3, this approach significantly increases capital efficiency by concentrating depth where trading activity is most likely to occur, thereby reducing slippage for traders and increasing potential fee returns for providers

Important: You only earn fees and rewards while your position remains in range.

What is an AMM

An Automated Market Maker (AMM) is a decentralized exchange protocol that facilitates the automated trading of digital assets using liquidity pools and smart contracts instead of traditional order books.

Instead of matching buyers with sellers, AMMs allow users to trade directly against a pool of tokens deposited by liquidity providers. Prices are determined algorithmically, often using the constant product formula (x · y = k), which adjusts token values based on the ratio of assets in the pool to ensure continuous, 24/7 liquidity without intermediaries.

AMMs allow anyone to become a liquidity provider and earn fees — a core principle of user-owned finance.